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| Statement |
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| This inventory investment has generated an exceptional return on invested capital and enabled the strong growth Lugano has experienced |
| We continue to fund capital investment to expand the company’s footprint and inventory position, realizing exceptionally strong returns on invested capital that is fueling the company’s rapid growth |
| I am pleased to report a strong fourth quarter, capping off another exceptional year for CODI |
| Our results continue to demonstrate that owning premium businesses with defensible competitive moats can drive financial outperformance, even during periods of economic uncertainty |
| And a lot of times, they’re really niche businesses, they’re niche kind of industries that they’re in, they’re market share leaders, probably great good cash flow |
| And Troy, we just believe is very strong at driving operational efficiencies and at delivering for the end customer in a DTC environment and we think that combination will really yield tremendous benefits |
| And so, our full expectation is, as we continue to execute on this, our growth rate is going to continue to pick up, our core growth rate and one should be more comfortable with a slightly higher level of leverage when you have better quality businesses with more defensibility around those companies, they have better growth profiles, longer term, because they’re able to take market share, not just grow in line with their industries |
| Lugano once again delivered remarkable growth, producing 53% annual revenue growth and 65% adjusted EBITDA growth |
| Well, that drives our professional growth as well and we’re seeing strong growth in professional and we believe we’ll continue to see strong growth in professional |
| And Lugano’s growth rate and sort of what Moti and Idit have built there, it is just truly phenomenal |
| In the fourth quarter, our branded consumer businesses experienced strong subsidiary adjusted EBITDA growth of 26% over prior year |
| We believe channel inventory will continue to right-side and turn into a tailwind in 2024, which we expect will enable a much higher level of growth for many of our consumer businesses, making up for the growth we didn’t experience in 2023 |
| Our industrial businesses generated double-digit subsidiary EBIT -- subsidiary adjusted EBITDA growth in the fourth quarter and full year |
| The easing of inflationary pressures boosted margins and resulted in adjusted EBITDA growth above long-term trends |
| We remain optimistic about our industrial vertical in 2024 since backlogs remain at very healthy levels |
| And Altor is performing really well and we have an exceptional management team there |
| So, our industrial businesses performed exceedingly well in 2023 and they entered 2024 with really healthy backlogs |
| This important shift has boosted the power of our growth engine to produce a more consistent, faster level of growth |
| This diversification in growth drivers not only reduces financial volatility, but it also increases the likelihood of us achieving our core growth rate on an annual basis |
| The language from customers is clearly that, we’re going to have a more stable, solid 2024 |
| Although the M&A markets were weak for most of 2023, we were able to consummate the divestiture of Marucci Sports, realizing a significant gain for our shareholders |
| We continue to see strong returns on invested capital at several of our growth subsidiaries and believe they will have short payback periods |
| It’s got huge market potential and opportunity |
| Elias Sabo And so we expect really strong growth |
| I think if it becomes a third of our EBITDA, like you referenced, we’re going to have a really good year this year, because you’re talking about a business that’s going to generate kind of growth rates similar to 2023 and I promise you that is not built into our guidance at all |
| Thank you, and yeah, it’s just been a really tremendous success, so it is a high-class company |
| In addition, we remain steadfast in our efforts to identify and acquire similar disruptive businesses to further build upon our track record of delivering growth for our shareholders |
| We believe our industrial subsidiaries are positioned to continue to take market share through innovation, as evidenced by Altor Solutions being first to market with a biodegradable solution, and Arnold Technologies leading the market in advanced materials used to generate green energy |
| We believe our industrial businesses will continue to perform well again in 2024 as a stable macro-economy and company-led innovation is expected to lead to another year of growth |
| Thus far in 2024, our results have exceeded our expectations |
| Statement |
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| On the sort of more Crossman side, it just continues to have slightly weaker or weaker POS than we would hope, really driven by a lot of buying kind of during the pandemic era and so a lack of replenishment really needed |
| In many cases, we passed on the benefits from lower cost to our customers, leading to the slight revenue decline |
| But at the same time, we are facing two straight years of negative growth there |
| As Elias mentioned, we believe this quarter represents a transitional period where, though inventory-related distortions in the supply chain have not fully dissiplate -- dissipated, the headwind they have had on our consumer revenues has weakened significantly |
| Our competitors continue to struggle with leveraged buyout financing as a function of the current environment, specifically in consumer |
| I think that the challenge that we have with respect to adjusted earnings is Lugano |
| But in the -- archery is -- in the archery side, we’ve seen some of that same destocking and/or some inventory reduction levels that have hit the business |
| But there’s no reason we should underperform our core growth rate of mid-single digits this year |
| I would tell you that we were a little bit shell-shocked by kind of the depth of the inventory changes of 2023 and so we’ve been hesitant to build that in |
| Now, that said, I think, we’re a little cautious, which is why we only guided to sort of kind of 1%, 2% growth here |
| Our diversification yet again led to a reduction of financial volatility, which we believe will be further reduced as we add more subsidiaries and enter into the healthcare vertical |
| I guess just based on recent underperformance relative to our expectations, I wanted to cut out of Sterno |
| So, Kyle, I mean, last year, it’s always tough to compare adjusted earnings when you have discontinued operations, right? So, last year, we pulled out ACI and Marucci, right? So, that lowers our adjusted earnings |
| As inventory destocking headwinds started to subside |
| So, there’s, like, no real, like, issues that I could point to in any one of the companies other than to say, again, when you’ve tripled sort of your core growth rate in a year, you’re a little hesitant to go too far out on your skis in the following year |
| You will remember the year -- the prior year’s fourth quarter started a major inventory destocking trend that lasted throughout 2023 |
| But then we expect it to fall kind of back down below that |
| I just don’t know about the underperformance of Sterno |
| It’s a tough, I mean, it’s two or three businesses |
| I mean, similar to what we said on cash flow is, the first quarter is generally, first quarter and second quarter are kind of generally slightly weaker than the third quarter and fourth quarter because a lot of our businesses have momentum to close out the year, whether it be… Kyle Joseph Yeah |
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